After several years of intense debates in the European Parliament, which had bitcoin (BTC) and cryptocurrencies as their central axis, MEPs seem to have reached an agreement on the regulation of this sector.
The long-awaited Regulation on the Cryptoactive Markets, better known as the MiCA Law, was agreed under a “provisional political” agreement whose main objective is regulate issuers and service providers with crypto assetssuch as exchanges.
The approved regulation seeks to harmonize the European Union (EU) market, establish regulatory certainty, improve consumer protection and prevent fraud, as well as strengthening the financial stability of the eurozone, according to a release of Parliament.
“The new legal framework will support market integrity and financial stability by regulating public offerings of crypto assets. It also includes measures against market manipulation and the prevention of money laundering, the financing of terrorism and other criminal activities.
European Parliament.
The legislation provides for the establishment of a public registry for service providers with crypto assets that do not comply with the standard and that provide services in the European Union without authorization.
Bitcoin mining ban ruled out
One of the most discussed points by European negotiators focused on the Proof-of-Work (PoW) consensus mechanism of the cryptocurrency industry, remaining ruled out its prohibition in this agreement.
This position became clear after the European Parliament voted against limiting the use of PoW cryptocurrencies, such as bitcoin and ether (ETH), last March, as reported by CriptoNoticias.
What the document approved by MEPs does include is that service providers with crypto assets will have to disclose information on the sustainability of crypto assets and your consent. Additionally, it includes a revision clause that could introduce additional rules for this sector in the future.
Service providers “must make available to the public, in a prominent place on their website, information on their environmental impact.” It is to be remembered that this was one of the arguments to try to ban Bitcoin mining.
NFTs, stablecoins and DeFi
According to Patrick Hansen of blockchain firm Unstoppable DeFi, most of the agreed aspects are framed in rule approved yesterday, that will allow to track the transactions that are made with bitcoin and identify the users who perform them, a fact reviewed by CriptoNoticias.
Regarding non-fungible tokens (NFT), stable cryptocurrencies or stablecoins and decentralized finance (DeFi), Hansen commented that “there is not yet 100% clarity.”
This is because “truly” decentralized DeFi protocols, NFTs, and crypto lending platforms are not within the scope of MiCAsaid.
For his part, the Spanish MEP, Ernest Urtasun, explained that the new regulations “provide protection” in cases such as the recent collapse of the terra stablecoin (UST).
They are also going to try to control stablecoins under “strict operational and prudential rules,” Urtasun commented. This would work with restrictions if they are widely used as a means of payment, and establishing a cap of 200 million euros in transactions diaries.
The new regulations must first be approved by the Committee on Economic and Monetary Affairs, which will be followed by a vote in plenary. The general application of the MiCA Law in the eurozone will start 18 months after the entry into force.